Procurement C mpass

Value for Money Economy Efficiency Equality Transparency Integrity Navigation

PROCESS ATTRIBUTES MARKET APPROACH EVALUATION ATTRIBUTES APPLICABLE MECHANISMS

PROCUREMENT 1 Stage Open Limited Stand Probity
Inter. Nat. Preq. Multi RFP RFB BaFO Negot. Price Sustanability Innovation Other APA ALT
METHODS 1 Envelop 2 Envelop Stage Comp. Comp. Still Assurance

International Competitive a
Bidding (ICB) a a a a a a a a a a a a a a a a a
Competitive Dialogue (CD) a a a a a a a a a a a a a
Innovation Partnership (IP) a a a a a a a a a a a a a
Limited Bidding (LB) a a a a a a a a a a a a a a a a a a
National Competitive Bidding
(NCB) a a a a a a a a a a a a a a
Shopping (S) a a a a a a a a a
Direct Contracting (DC) a a a a a a a a
Electronic Reverse Auction
(ERA) a a a a

Other Modalities Types of Contract Procurement Object Country Systems Specifications

GN-2349-15

ES EN
Evaluation Net Present Sustainable
GN-2350-15 Decision Tree
Criteria Value Procurement
ES EN
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Decision Tree Link to an internal information source.

Route to the most appropriate procurement Click on the compass to expand your
method. search.

Supply and Demand Matrix This icon indicates which attributes,

Tool to understand the relationship between
the market and the various procurement
strategies.
a market approaches, or mechanisms
are applicable for the selected
procurement method.

This icon indicates the attributes,

Evaluation Criteria
Classification of the various criteria, evaluation
methods and rules for awarding contracts. a market approaches, or mechanisms
that are optional for the selected
procurement method.

Sustainable Procurement Link to an external source of

Everything you need to know to design a information. Click to expand your
sustainable procurement process. search.

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Under Value for Money (VFM) considerations, the Bank seeks effective, efficient and economical use
of resources, which require the assessment of relevant costs and benefits, as well as risks and other
attributes other than price, including life cycle costs, where appropriate.

Relevant Considerations
It is a principle for the evaluation of offers1: VFM is not an evaluation criterion, but a concept that
serves as the basis for comparing offers, in order to select the most advantageous2. Sometimes the
price itself is not an accurate indicator, especially for complex acquisitions, where quality, sustainability,
innovation and lifecycle costs are all dimensions relevant to accomplish success.

In addition to proper contractual management, it requires compliance with the following requirements:

Value for Money

➢ Integrity throughout the entire procurement process.
➢ Clear definition of procurement needs and objectives.
➢ The procurement approach is proportional to their risk, value, context and complexity.

(VFM)
➢ Specification of the technical and functional conditions and requirements of what is intended to be
procured.
➢ Selection of contractual arrangements, procurement method and relevant evaluation criteria.

Links and 1 This condition treats value for money as a key principle of procurement, rather than a subordinated objective. .
2 VFM is the optimal combination of efficiency, effectiveness and economy in every purchase. It cannot be evaluated through just one of these dimensions.
References
 Links and References

➢ CCE (2015). ¿What is Value for Money? Colombia Compra Eficiente, Colombia

➢ ChileCompra (2017). Value for Money in Public Procurement. Dir. ChileCompra, Chile

➢ Jackson, Penny (2012). Value for Money and International Development. OECD, Paris

➢ OECD (2015). Recommendation of the Council on Public Procurement. OECD, Paris.

[EN] [FR] [SP] [PR]

➢ Sope Williams-Elegbe (2017). “Value for Money, Competition and Selection Procedures”

in Public Procurement and Multilateral Development Banks: Law, Practice and

Problems. Hart Publishing, Portland. Pp. 103-142

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 Economy

The Economy principle refers to the purchase of appropriate quality supplies at the appropriate price.
The economy principle considers price-related and non-price-related factors, such as quality,
sustainability and life cycle costs, as appropriate, that support value for money. This principle can
consider sustainability under specific criteria in support of the Borrower's sustainable procurement
policy.

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 Efficiency

The Efficiency principle requires procurement processes to be proportional to the value and risks of
the underlying project activities.

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 Equality

The Equality principle consists in giving all eligible bidders from developed and developing countries
the same information and equal opportunity to compete in providing goods and works financed by
the Bank.

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 Transparency

The Transparency principle requires that relevant procurement information be made publicly
available to all interested parties, consistently and in a timely manner, through accessible and widely
available sources at reasonable or no cost and appropriate reporting of procurement activities,
including contract awards.

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 Integrity

The Integrity principle refers to the Bank’s financing being used for its intended purpose and good
governance practices and also requires that all parties involved in the procurement process observe
the highest standards of ethics during the procurement process of Bank’s financed contracts and
execution of the project, and refrain from Prohibited Practices, in accordance with paragraph 1.16
and Bank’s Sanctions Procedures.

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 International Competitive Bidding

The objective of the International Competitive Bidding (ICB) is to provide all potential eligible
bidders with timely and appropriate notification of a Borrower's requirements for the necessary
goods and works of a project, and to provide such equal opportunities to submit bids in relation to
them. ICB may be carried out through RFB (used when the Borrower is able to fully specify the
detailed requirements) or RFP (used for complex and innovative procurement).

It is used to purchase works, goods or services, in relevant or complex quantities, in which the
scope, purpose and/or function can be clearly defined in sketches or technical specifications. Some
of its main features include:

➢ Maximum competition and transparency

➢ It involves national and international suppliers
➢ May exceed the expected time

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 Limited Bidding (LB)
A Limited Bidding (LB) is a competitive method by invitation without open advertisement. It may
be an appropriate method of procurement where (a) there is only a limited number of suppliers, or
(b) other exceptional reasons that justify departure from full ICB procedures. Under LB, Borrowers
shall seek bids from a list of potential suppliers broad enough to assure competitive prices, such list
should include all suppliers when there are only a limited number.

It is used to purchase works, goods or services where there are a limited number of suppliers on
the market or where its use is exceptionally justified instead of an LPI.

Principle features:

➢ Shorter term than ICB

➢ Limited number of national and international suppliers
➢ It doesn't require public notice, but it requires an invitation
➢ All other ICB rules apply

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 National Competitive Bidding (NCB)

The National Competitive Bidding (NCB) is the competitive bidding procedure normally used for
public procurement in the country of the Borrower and may be the most appropriate way of
procuring goods or works which, by their nature or scope, are unlikely to attract foreign
competition. To be acceptable for use in Bank-financed procurement, these procedures shall be
reviewed and modified as necessary to align with Core Procurement Principles, and broad
consistency with the provisions included in Section I of these Policies.

It is used to purchase works, goods and services for an estimated amount less than the ICB
threshold or because due to its scope or nature there is no interest of international suppliers under
the four assumptions stipulated in the Policies. Some of its main features include:

➢ The procedure and specifications used should be consistent with the Basic Principles of
Procurement and the provisions of Section I of the Policies

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 Shopping
Shopping is a procurement method based on comparing price quotations obtained from several
suppliers (in the case of goods) or from several contractors (in the case of civil works), with a
minimum of three, to assure competitive prices, and is an appropriate method for procuring readily
available off-the-shelf goods or standard specification commodities of small value, or simple civil
works of small value.

It is used to purchase goods or services in stock and easy to obtain or simple works requiring at
least three valid offers.

Principle features:

➢ Simple, quick and informal procedure

➢ It is formalized through a purchase order, service order or simplified contract
➢ Limited competition

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 Direct Contracting (DC)
Direct Contracting (DC) is used to purchase works, goods or services directly, without competition or
advertising.

Principle features:

➢ No competition
➢ It must be justified in accordance with the requirements in paragraph 3.6 of the Policies

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The Competitive Dialogue (CD) allows the dynamic interaction of the borrower with the bidders. It is
recommended to use when making complex or innovative acquisitions.

Under this method, the borrower engages in a dialogue with the companies or JVCA (Joint Venture,
Consortium or Association) initially selected, with the aim of identifying and specifying suitable
alternative solutions, to satisfy the needs, before inviting firms to submit their final proposals. Requires
the presence of an independent probity authority.

Relevant considerations:
Questions that help determine the desirability of using CD:
➢ Are the needs clear, but the means to meet them undefined?
➢ Does the borrower wish to encourage and enable innovation and is willing to abstain from defining
the means that will satisfy the needs?
➢ Could the needs be met through several different solutions?
➢ Has the borrower made prior purchases for similar needs? If so, where the results satisfactory?

Competitive
➢ Is the borrower confident that other procurement methods do not allow a level of collaboration
between him and the bidder, for the development of an appropriate solutions?
➢ Does the borrower have resources for an intensive medium- or long-term procurement process (8

Dialogue (CD)
to 12 months), requiring a high level of technical, legal and commercial input and knowledge, as
well as resources and costs?
➢ Is there a high level of market interest and competition?
➢ Have other procurement selection methods been evaluated and discarded?

Independent Probity Assurance Authority:

In order to ensure the implementation of the Core Procurement Principles defined in the Policies, the
borrower shall identify an Independent Probity Assurance Authority acceptable to the Bank, to be
designated at the beginning of the process and that supervise it until the award of the contract.

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References
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➢ The borrower shall keep confidential minutes of the dialogue meetings with

Competitive Dialogue each bidder, which shall be communicated to the same as part of the
invitation to submit final proposals. The minutes shall not form part of the

(CD)
request for a final proposal.
➢ If the borrower has not previously performed a CD procedure, it is
recommended to rely on an expert in this method of selection and hiring.
Guidelines for the CD:
Preparation of the CD:
It consists of rounds of confidential meetings with each of the prequalified
bidders, in the presence of the probity assurance authority, to analyze all Before starting the procedure, it is essential that the borrower plans the entire
aspects of the preliminary technical proposal submitted, including the details of process to identify the complexities, critical route and estimated duration of the
the proposed solution, its sustainability, legal aspects, estimated price and other procedure, in order to establish the workflows, the necessary resources and to
elements deemed relevant. In order to ensure success you should consider: designate a responsible team in charge of the CD. In parallel, it is vital to know
the existing market, the appetite of potential stakeholders to engage in a CD,
➢ Establishing the number of meetings with each bidder, to clarify the the expected level of competition and commitment of the different actors. CD
information included in their preliminary technical proposal. If necessary, involves significant dedication and costs to participants, who must have a clear
additional meetings can be held. understanding of their conditions and scope. In this preparation phase, the
➢ Avoiding preferences or providing information that may affect the position probity assurance authority should be identified and hired.
of other bidders.
➢ Bidders shall indicate to the borrower the parts of their preliminary
proposal that are commercially confidential.
➢ The borrower shall not disclose the proposed solutions to other bidders,
nor the confidential information provided, or shared during the CD without
the written consent of the bidder. Click on the image to see
➢ The borrower will not use a bidder’s confidential information to improve the “Competitive Dialogue
other proposals. Procedure and Estimated
Time on Continuous Days”

1 The procedure indicated may be adjusted according to the nature and complexity of the specific case.
Links and 2 The deadlines indicated depend on each case and the state of development of the project.
References
 Links and References

➢ World Bank Competitive Dialogue

➢ HM Treasury United Kingdom. Competitive Dialogue Guidance

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The Innovation Partnership (IP) is a multistage procedure where the Borrower needs a solution for
delivering better works, goods or services to achieve their sustainable development goals, and that
solution is not readily available in the market.

Relevant considerations:
➢ It differs from pre-commercial public procurement in that it is intended to contract R&D activities,
and from the public purchase of innovation, in that it merely acquires something already existing,
either as a prototype or because it is not available on a commercial scale, so it requires the
development of new or improved technology, without R&D.

Features and Guidelines of the IP:

➢ It will be used in exceptional circumstances, and it should justify that the identified need is absent
in the international market. The Bank reserves the right to verify the scope and data of the
justification.
➢ It is a competitive multistage procedure, demanding extensive technical, administrative and

Innovation ➢
negotiation skills.
The bidding documents should identify the need for an innovative service or work through the
description of the central elements the minimum requirements to be met by the bidders.

Partnership (IP) ➢

➢
The information provided must be sufficiently accurate to allow candidates to identify the nature
and scope of the required solution and decide whether to participate in the procedure.
It can be agreed with one or more vendors.
➢ It follows the sequence of stages of the research and innovation process, which may include the
development or design, manufacture of goods, the provision of services or the completion of
works.
➢ It shall establish intermediate milestones to be met by the members and provide for the payment
of remuneration in the appropriate terms.

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References
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➢ Bidders should be selected based on their capacity in the field of research and development of
innovative solutions.
➢ The borrower will negotiate the initial proposals with the bidders and all subsequent proposals
submitted by them, except for the final one, to improve the content of the proposals, but not
including the minimum requirements and the award criteria which are not subject to negotiation.
➢ The contract shall define the arrangements applicable to intellectual property rights.
➢ If a supplier does not meet the intermediate objectives, the IP may be terminated in respect of that
supplier, after payment of what has been successfully achieved so far.
➢ At the end of each phase, the borrower may terminate the IP, or reduce the number of suppliers.

Features and Guidelines of the IP:

➢ The competitive phase is performed at the beginning of the procedure, when the most suitable
partners are selected according to their skills and experience.
➢ In the development phase, partners develop the solution in collaboration with the borrower. R&D

Innovation ➢
can be divided into several stages.
In the commercial phase, the agreed products are delivered.

Partnership (IP) Benefits:

➢ It stimulates the development of innovative solutions.
➢ It allows to identify and select the best partners for the development and production of the
solution.
➢ It contributes to achieving the sustainable development goals.

Click on the image to see the phases

of the Innovation Partnership

Links and
References
 PHASE 1 PHASE 1 PHASE 3/ PURCHASE

Investigation Activities Prototype creation Pilot creation

Procurement of the
resulting works/ services/
goods
Bidder 1

Bidder 2

Bidder 3
 Links and References

➢ Agencia Valenciana de la Innovación

➢ Innovation Partnership in the New Public Procurement Regime – A Shift of Focus from
Procedural to Contractual Issues?

➢ European Commission. (2018) Guidance on Innovation Procurement

➢ European Commission. (2016) Innovation partnerships keep public services up to date

➢ European Parliament. (2014) Directive 2014/24/EU on Public Procurement and Repealing

Directive 2004/18/EC. Article 31

➢ Procurement Journey. Route 3 – Develop Strategy – Procurement Route – Innovation

Partnership

➢ Yeow, J. and Edler, J. Innovation procurement as projects. Journal of Public Procurement,

Volume 12, Issue 4, 472-504. Winter 2012

➢ Van Putten, M. Leading public innovation procurement

➢ Uyarra, E., Monux, D., et al. Spurring Innovation-led Growth in Latin America and the Caribbean
through Public Procurement. Interamerican Development Bank. Competitiveness and
Innovation Division. Discussion paper IDP – DP – 488. Washington, November 2016

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 Electronic Reverse Auction

The Electronic Reverse Auction is a scheduled online event in which prequalified or registered firms have met the
minimum qualification criteria and bid against each other on their price.

Relevant considerations:
➢ Conducting a reverse auction requires conditions within the process.
➢ A strictly electronic procedure. No proposals or face-to-face bids are acceptable.
➢ The existence of a competitive market of suppliers or contractors, with the participation of companies of any size.
➢ The detailed and unambiguous description of the subject matter of the contract to be awarded.
➢ Criteria for determining the quantifiable and expressible winning bid in monetary terms.

According to the characteristics of the market and the nature of the object of what is intended to be contracted, low
price auctions1, first-price-up auctions2 and any other form of auction3, for which the conditions above.

Where possible, the reference price, as well as the widespread and systematic use of this mechanism, will be avoided
in order to avoid coordination among auction participants.

1 Also known as the English Auction

2 Also known as the Dutch Auction
3 Other reverse auction modalities include the Japanese Auction, Multiple Attribute Auctions, among others.

Links and
References Home
 Links and References

➢ Dimitri, N., Piga, G., and Spagnolo, G. (2006). “Dynamic auctions in procurement”, “Bidding rings
and the design of anti-collusive measures for auctions and procurements” and “Corruption in
procurement auctions” in Handbook of Procurement. Cambridge University Press, New York.
Pp. 220-245, 381-411, 412-429.

➢ Milgrom, Paul (2004). Putting Auction Theory to Work. Cambridge University Press, Cambridge

➢ Milgrom, Paul and Robert J. Weber (1982). A Theory of Auctions and Competitive Bidding.
Econometrica, 50, PP. 1089–1122

➢ Shalev, Moshe E. and Stee Asbjornsen (2010). Electronic Reverse Auctions and the Public
Sector: Factors of Success. Journal of Public Procurement, Volume 10, Issue 3, Pp. 428-452

➢ UNICTRAL (2014). Model Law on Public Procurement UNICTRAL. United Nations, New York

➢ Durá, Pedro. (2003). Teoría de Subastas y Reputación del Vendedor. CMNV, Spain

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Multi-Stage procurement (AME) is recommended when, while knowing or identifying the most appropriate
solution, it is impractical to prepare in advance complete technical specifications due to the complexity or
magnitude of the scope of the good, work or service because the borrower does not have enough information
to produce complete technical specifications.

Relevant considerations
In the Multistage Procurement, the borrower can organize confidential meetings to inquire on technical and
functional clarifications, including other aspects. The specification shall be amended to reflect the aspects
identified and to improve the solution identified by the borrower.
Duration2 Duration2
Multistage Procurement Process (Calendar Multistage Procurement Process (Calendar
Days.) Days.)
1. Pre-qualification (if it applies) 3. Request for Final Proposals
1.1 Pre-qualification documents preparation 3.1 Based on bilateral meetings, a request for final proposal is prepared and

1.2 Publication of specific procurement notice bidders are invited to submit a final technical and financial proposal
3.2 Clarifications of request for proposals 30
1.3 Preparation of pre-qualification applications 15

Multistage
3.3 Public act of submitting final technical and financial proposals.
1.4 Prequalification clarifications
Only technical proposals are opened
1.5 Public act filing and opening prequalification applications
3.4 Evaluation of technical proposals. Notification of results
1.6 Evaluation of prequalification applications (Go/No-Go)
3.5 Public act opening financial proposals

Procurement
1.7 Evaluation report and selection of pre-qualified entities 15 30
3.6 Evaluation of financial proposals
1.8 Notification of prequalification results 3.7 Preparation of an evaluation report, including identification of the most
2. Request for preliminary proposal and bilateral meetings advantageous proposal and of abnormally low bids, if any.
2.1 Preparation and submission to pre-qualified requests for proposals, 3.8 Sending the notification of award intention.
10
with conceptual design, functional and/or initial performance specifications Suspension term is activated.
and rules of bilateral meetings 40 3.9 If a protest is received, it is settled before the contract is awarded 153
2.2 Period of clarification on request for technical proposals 3.10 Contract award and signing.
2.3 Public act of filing and opening request for proposals Includes presentation of guarantees provided. 30
2.4 Evaluation of technical proposals 15 3.11 Publication of award notification

2.5 Confidential bilateral meetings with bidders 15 Multistage Procurement Total Estimation in Days 210

2.6 Evaluation report on technical proposals and bilateral meetings.

May include rejection of unsatisfactory technical proposals.
10
2.7 Notification of evaluation results of technical proposals and meetings
bilateral meetings.

Links and 2 The timeframes are estimated and depend on the complexity of the project and the responsiveness of the market.
3 It is not considered in the full-time frame because it is an uncertain fact.
References
 Links and References

➢ Procurement Regulations for IPF Borrowers. Annex XII. Selection Methods- World Bank

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 Request for Proposal (RFP)

Is a bidding document that should be used when the Borrower is not able to clearly specify its
requirements (typically used for complex and innovative procurement) allowing firms to offer
proposals that vary in the degree in which they meet the requirements set forth in the bidding
document. The evaluation criteria normally includes rated type criteria.

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 Request for Bids (RFB)

Is a bidding document that should be used when the Borrower is able to fully specify the detailed
requirements that enable firms to offer bids that meet the requirements set forth in the bidding
document. The evaluation criteria is normally expressed in monetary terms.

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 Best and Final Offer (BAFO)

The Best and Final Offer (BAFO) is an option under which the Borrower invites bidders that have submitted
substantially responsive bids to submit their BAFO.

Relevant Considerations
1. General conditions for the evaluation criteria
➢ It is used in international competitive bidding (ICB), limited bidding (LB) and is subject to ex-ante review .
➢ Cannot be combined in the same procurement process with negotiation.
➢ The independent Probity Assurance Authority is optional.

Its procedure should be expressly provided in the tender documents, with the applicable rules and guidelines. If the
BAFO mechanism was intended, it applies even if a single offer is received. The BAFO is applied after the evaluation
of financial proposals is completed.
Procedimiento Adquisición en Múltiples Etapas con MOF1
1. Precalificación (si aplica)
2. Solicitud de Propuesta preliminar y reuniones bilaterales
3. Solicitud de Propuestas finales
3.6 Evaluación de propuestas financieras
3.7 Invitación a preparar y presentar la MOF
3.8 Acto público de presentación y apertura de MOF
3.9 Evaluación de la MOF
3.10 Elaboración de informe de evaluación, incluyendo identificación de
propuesta más ventajosa y tratamiento de la propuesta anormalmente
baja, si la hubiera
3.11 Envío de notificación de intención de la adjudicar. Se activa plazo suspensivo
3.12 Si se recibe protesta, se solventa antes de adjudicar el contrato
3.13 Adjudicación y firma del contrato. Incluye presentación de garantías previstas
3.14 Publicación de notificación de adjudicación
1 The deadlines indicated are for reference and depend on each case and the state of development of the project.
2 The procedure indicated may be adjusted according to the nature and complexity of the specific case.

Links and
References Home
 Links and References

➢ World Bank. Procurement Regulations for IPF Borrowers. Annex XII. Selection Methods

➢ Jimenez, E. y Roca, M.E. Innovation in the Methods of Public Procurement in Latin America and
The Caribbean: Study Cases. Inter-American Development Bank. Technical Note IDB – TN – 1336.
November 2017. Washington

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 Negotiations

The Negotiation allows the Borrower to enter into a dialogue with the bidder who has submitted the most
advantageous offer.

Relevant Considerations
➢ It is only used in international competitive bidding or limited bidding, and subject to ex-ante review.
➢ It cannot be included in the same procurement process where the best final offer is allowed.
➢ It requires an independent Probity Assurance Authority.
Negotiation should be expressly provided for in the tender documents with the rules and guidelines they apply to it.
The probity authority must be designated from the outset of the process to familiarize it with the bidding document
and the bids received. Trading is triggered after the evaluation of the financial offer. This is amended in step 3 of the
AME procedure:
Procedimiento Adquisición en Múltiples Etapas con Negociación 1
Etapa 1. Precalificación (si aplica)
Etapa 2: Solicitud de Propuesta preliminar y reuniones bilaterales
Etapa 3: Solicitud de Propuestas finales
3.5 Apertura de propuestas financieras en presencia de autoridad de probidad
3.6 Evaluación de propuestas financieras
3.7 Elaboración de informe de evaluación, incluyendo identificación de propuesta
más ventajosa y tratamiento de la propuesta anormalmente baja, si la hubiera
3.8 Negociación con la oferta más ventajosa en presencia de autoridad de
probidad. Si esta negociación no es satisfactoria, se negocia con la siguiente oferta
más ventajosa y así sucesivamente
3.9 Preparación del informe de autoridad de probidad sobre el proceso de
negociación
3.10 Envío de notificación de intención de adjudicación. Se activa plazo suspensivo
3.11 Si se recibe protesta, se solventa antes de adjudicar el contrato
3.12 Adjudicación y firma del contrato. Incluye presentación de garantías previstas
3.13 Publicación de notificación de adjudicación

Links and
References Home
 Links and References

➢ World Bank. Procurement Regulations for IPF Borrowers. Annex XII. Selection Methods

➢ Jimenez, E. y Roca, M.E. Innovation in the Methods of Public Procurement in Latin America and
The Caribbean: Study Cases. Inter-American Development Bank. Technical Note IDB – TN – 1336.
November 2017. Washington

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The Notice of Intent to Award (NIA) is a written notice transmitted to each bidder that submitted a bid,
informing them of the intention to award the contract to the successful bidder.

The Standstill Period shall apply to give the bidders time to examine the NIA and to assess whether it is
appropriate to submit a complaint.

Relevant Considerations
The NIA is sent after the Bank’s non-objection to the evaluation report, or after successful negotiations
with the relevant bidder or consultant are concluded.

Guidelines for sending the NIA

➢ It must contain enough information about the evaluation process of the bidder or proponent to
which it is addressed, indicating that it initiates the suspensive period for receiving complaints and
the date of termination of the complaint.
It must be sent simultaneously and without delay to all bidders.

Notification of
➢
➢ The executing agency must be aware when the NIA is sent.
➢ The Standstill Period begins after the day the NIA is sent. .
It is not a substitute for the publication of the award notice.

Intention to
➢
➢ Once it is issued, the confidentiality regime on the procurement process ceases, without prejudice
to the duty to preserve the commercial reserve and sensitive business information.

Award and The Standstill Period allows bidders to assess whether it is appropriate to file a complaint and it lasts
ten (10) business days after the NIA, except for the assumptions set out in numeral 2.79 of policy GN-
2349-15 and 2.31 of the GN-2350-15. If a complaint is received, the award of the contract is suspended

Standstill Period until its termination. For this reason, the Borrower must promptly process the handling of the
complaint, in coordination with the Bank, as described in Appendix 1 of the Policies.

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➢ Upon receipt of the non-objection, the borrower may publish the results of
the award without the need to make a new NIA or suspend the process.
Notification of Intention to If no complaint is received during the 10-business day period, the borrower
Award and Standstill Period shall:

➢ Inform the Bank that no complaints were submitted.

➢ Award the contract under the NIA that had the Bank’s non-objection.
Guidelines of the Standstill Period ➢ Publish the award of the contract.

➢ During the Standstill Period, interested parties may request information Benefits of the NIA and Standstill Period
about their assessment from the borrower. The information provided by the
Borrower may not include: (i) comparisons with the offers or proposals of
➢ It allows bidders to examine and evaluate merit for complaints.
the other bidders, or proponents; (ii) confidential or commercially sensitive
➢ Avoids declaring ineligibility or subsequently cancelling a contract.
information from other bidders or proponents.
➢ It allows you to set a schedule to deal with and resolve complaints.
➢ The contract may not be awarded before or during the Standstill Period
➢ The Standstill period may be extended in the following cases: (i) If a
significant number of complaints or protests are received; (ii) if one or more
bidders request to extend the time limit for preparing complete and more
substantiated complaints; (iii) when the borrower requires an additional
time limit for the handling of the complaint.
➢ If complaints are submitted, the borrower will send copies of these and
their motions for resolutions to the Bank for review and knowledge, as well
as for the no objection, before referring them to the complaint.

Click on the image

➢ Once the complaints have been resolved, the final award of the contract
may be issued.
➢ If after the analysis of the complaints, the borrower decides to change its
initial intention to award, it must reapply for a new non-objection,
accompanied by the reasons for its decision and the modified evaluation
report, which shall reflect the treatment and decision regarding the
complaint.

Links and
References
 Links and References

➢ Asian Development Bank. Standstill Period. Guidance Note on Procurement

➢ World Bank. Procurement Regulations for IPF Borrowers. Annex XII. Selection Methods

➢ Guidance on the Standstill Period. Crown Commercial Services. UK

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The Complementary Procurement Support (ACA) consists of supporting the management of

competitive procurement processes for goods, works, non-consulting services and consultancy
services, subject to prior review through the assignment of an expert team, agency or an independent
individual consultant.

Relevant Considerations
The responsibility for the selection and contracting process, as well as for the execution of projects,
rests solely with the borrower. The ACA does not mean that the Bank assumes the execution of the
acquisitions on behalf of the borrower.

Implementation:
The ACA can be requested by the borrower or recommended by the procurement specialist or team
leader, in any of the following cases:
➢ Identification of weaknesses in the ability to execute by the borrower.
➢ Complex and innovative processes.

Complementary
➢ Exceptional cases, such as emergency situations and natural disasters.

The ACA is analyzed on a case-by-case basis, in which the procurement specialist will evaluate the

Procurement
necessity along with the team leader of the project.

It may be used in procurement as follows:

Support (ACA) ➢ For new projects: Annex III will identify procurement processes to be supported by the ACA, as well
as the corresponding justification for this and the sources of funding. The initial Procurement Plan
will list procurement processes with ACA.
➢ For on-going projects: The procurement specialist, along with the team leader, will evaluate the
relevance and, if agreed, update the Procurement Plan indicating the procurements in which it will
be implemented.

Activities Activities Not Guidelines for

Links and
Click on the links Allowed Allowed Use of ACA
References
 Links and References

➢ World Bank - Procurement Hands-on Expanded Implementation Support

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 Activities Allowed - ACA

➢ Contribute to defining the project procurement strategy.

➢ Support in the preparation of the Procurement Plan.
➢ Support in the preparation of documents for the international bidding process.
➢ Participate in previous preparatory meetings or during the bidding process.
➢ Attend clarifying meetings and support the development of answers to clarifying questions.
➢ Participate as an observer in presentation and opening of bids.
➢ Support consistency in the application of evaluation criteria and verification of their compliance,
during the evaluation process.
➢ Support the preparation and definition of the strategy for contract negotiation and participate in the
negotiations.
➢ Support the design and elaboration of the final contract.
➢ Support in the design of contract management and monitoring mechanisms.
➢ Participate in briefings with unselected bidders.
➢ Support and guide in the attention of claims and protests.

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 Activities Not Allowed - ACA

➢ Grade, reject bids, assign scores, and sign the assessment report.
➢ Integrate the borrower evaluation committee.
➢ Decide the winning proposal and communicate the outcome of the process to the participants and
adjudicator.
➢ Assume the negotiation of the contract.
➢ Attend information meetings with unselected bidders without the borrower.

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 Guidelines for the Use of ACA

➢ Given the nature of the support provided under any of the modalities of the ACA, the procurement
specialist and the team leader shall retain their full power to review and issue mandatory concepts,
technical opinions and non-objections.
➢ It may not be perceived or give rise to a situation of conflict of interest.
➢ Its use does not imply that the Bank waives the rights and powers stipulated in the Constitutional
Agreement, Loan Agreement, Procurement Policies and other Bank policies and regulations, applicable
to the project and the borrower.
➢ The team, agency or consultant running the ACA will be selected and contracted in accordance with
the Bank's procurement policies and will be obliged to keep confidential during the process.
➢ The expert opinions issued by the team, agency or consultant implementing the ACA are independent
and do not represent or compromise the Bank's opinion.

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The Independent Probity Assurance Authority (IPAA) is a third party (natural or legal, public or private
personnel) that offers specialized probity verification services during procurement processes, under the
modality of Competitive Dialogue or Negotiations in an acquisition process. Its appointment must
have the Bank's non-objection.

Relevant Considerations
➢ The IPAA conducts an independent review of the procurement process and ensures that the Bank's
Basic Procurement Principles have been complied with.
➢ Once the borrower makes the decision to award the contract and prior to the submission of the
Notice of Intent to Award the Contract, the IPAA shall prepare the probity report, which shall be
sent to the borrower and the Bank,
➢ The probity report will also be sent to all bidders attached to the Notice of Intent to Award. The
probity authority shall terminate its function once the contract has been awarded.

Guidelines and Scope

Independent ➢
➢
It must be designated before the start of the procurement process.
The request for proposals documents (including prequalification documents, if any) need tobe

Probity
reviewed before being sent to bidders and you will have access to the offers or proposals and all
documents generated during the procurement process.
➢ It accompanies the entire procurement process and you should warn of any deviation, vulnerability

Assurance
or risk that may compromise it.
➢ Must be present in all external or internal meetings and negotiations, including borrower
evaluation committee meetings.

Authority
➢ Must disclose any conflict of interest situation, or that compromises the independence of the
services provided as soon as it arises.
➢ It should help to ensure the confidentiality of the process and the proper treatment of documents
considered confidential.
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➢ You must inform the parties about the scope of the procurement process, the framework of
applicable rules regarding probity compliance, and their role as IPAA.
➢ You should provide impartial advice to avoid or resolve any probity issues that may compromise
the process.
➢ It can serve as a liaison with other borrower instances that require information about the process.
➢ Must prepare a probity report, which documents everything that has happened, with the
corresponding media that occurs during the process, so that the result of the process is adequately
supported.
➢ Must prepare and send interim probity reports to the borrower and bank at the end of each stage
of the acquisition process. These milestones will be indicated in the bidding documents and in the
Terms of Reference.
➢ The probity report shall be public and may be published on the borrower's website or in any other
public medium.

Independent
Probity
Assurance
Authority
 Links and References

➢ How to Undertake a Competitive Dialogue Procurement Process

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 Use of Country Systems – UCS

The Use of Country Systems seeks that the procurement systems of borrowing countries are used
in the design, execution and evaluation of Bank-financed operations.

Considerations:

The conditions for acceptability of the borrower's national procurement systems are set out in the
Update on the Strengthening and Use Strategy for Country Systems.

The bank's assessment to verify compliance with best practices in this area is the Methodology for
the Evaluation of Procurement Systems (MAPS), including the corresponding supplementary
modules, depending on the scope of the use of the systems that will be utilized.

Links and
References Home
 Links and References

➢ Update to the Strategy for the Strengthening and Use of Country Systems (GN-2538-31)

➢ Guide for the Acceptance of the Use of Procurement Country Systems (GN-2538-13)

➢ MAPS Initiative

➢ OECD (2005). Paris Declaration on Aid Effectiveness. OECD Publishing

➢ OECD(2008). Accra Agenda for Action. OECD Publishing

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 Other Methods of Procurement

➢ Force Account

➢ Procurement from Specialized Agencies (PSA)

➢ Procurement in Loans to Financial Intermediaries

➢ Procurement under Loans Guaranteed by the Bank

➢ Community Participation in Procurement (CPP)

➢ Modified International Competitive Bidding (MICB)

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 Force Account

Force account, that is, construction and installation of equipment and non-consulting services
carried out by a government department of the Borrower´s country using its own personnel and
equipment, may be the only practical method for constructing under specific circumstances. The
use of force account requires that the Borrower apply the same rigorous quality controls and
inspections as for contracts awarded to third parties.

It is used to acquire works and/or install equipment and services, made by a public entity
employing its personnel and equipment, in 5 assumptions indicated in the Policies.

Principal Features:

➢ Recommended for small and scattered works

➢ Quality risk in the result
➢ Ideal work plan, quality controls and rigorous oversight are suggested

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 Procurement from Specialized Agencies (PSA)

It is used to acquire goods in stock or specialized products in an economical and efficient way to an
international agency, which acts as a supplier. As a direct purchase, it requires justification.

Principal Features:

➢ PSA procurement procedures apply.

➢ It tends to be fast and of quality.
➢ Frequently used in educations and health sectors (vaccines and medicines)

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 Community Participation in Procurement (CPP)

Seeks project sustainability and/or achievement of social objectives through local services; local
knowledge and materials; use of labor-intensive technologies.

Principal Features:

➢ Social goals are met.

➢ Community appropriation.

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 Modified International Competitive Bidding (MICB)

The Modified International Competitive Bidding is used when:

➢ An import program is financed, or;

➢ To purchase commodities such as cereals, fuels, fertilizers or metals, which its prices fluctuates in
established markets (stock market or similar).

Some of its main features include:

➢ It is simplified in terms of advertising and coins. May require inspection agency.

➢ The aim is to guarantee supply. It is quoted and paid in the specific market currency.
➢ Allows you to receive offers by electronic means, telex or fax.

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 Subject of Acquisition

➢ Goods

➢ Second-Hand Goods

➢ Consultancy

➢ Leasing

➢ Works

➢ Different Consulting Services

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 Types of Contracts

➢ Framework Agreement

➢ Public-Private Partnerships (PPP)

➢ Performance-Based Procurement

➢ Time-Based

➢ Turnkey Contracts

➢ Unit Price

➢ Reimbursable Cost-Plus Fees

➢ Lump Sum

➢ Other Acceptable Contracts

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 Public Private Partnerships

Long-term contract between private and public parties to provide an asset or public service. The
private entities assume considerable risk and administrative responsibilities.

Principal Features:

➢ Useful for concession and infrastructure management

➢ Competitive
➢ Remuneration is linked to performance
➢ It usually requires sophisticated financial arrangements

Links and
References Back
 Links and References

➢ Asociaciones público-privadas en el sector de agua y saneamiento en América Latina

➢ Casos de estudio en asociaciones público-privadas en América Latina y el Caribe: Hospital de

Antofagasta (Chile)

➢ Casos de estudio en asociaciones público-privadas en América Latina y el Caribe: Escuelas en

Belo Horizonte (Brasil)

➢ Centro de recursos del Banco Mundial sobre las Asociaciones Público-Privadas

➢ Innovación en los métodos de contratación pública en América Latina y El Caribe: Casos de

estudio

➢ Casos de estudio en asociaciones público-privadas en América Latina y el Caribe: Proyecto

Vindobona, componente del programa de descontaminación de Ríos de Quito (Ecuador)

➢ Casos de estudio en asociaciones público-privadas en América Latina y el Caribe: Centro

Administrativo Tlajomulco (México)

➢ Cursos BID sobre Asociaciones Público-Privadas

➢ ¿Cómo se están estructurando financieramente las Asociaciones Público-Privadas en Salud en

América Latina?

➢ Public-Private Partnership (PPP) – Asian Development Bank

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 Performance-Based Contracting

It refers to competitive procurement processes that result in a contractual relationship in which

payments are made on the basis of measurable results, rather than the traditional way in which the
supplies are measured. The technical specifications define the expected results and what the
measurement elements will be and the parameters to be used to measure them

The expected results must meet a functional need in terms of quality, quantity and reliability.
Payment is made according to the amount of results obtained, subject to delivery with the
required quality level.

Principal Features:

➢ Competitive
➢ Also used for concessions
➢ The supplier can propose the most appropriate solution
➢ The expected results, measurement elements and parameters must be defined to measure them

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You can purchase Second-Hand Goods or Lease Assets with purchase option.

Relevant considerations for Leased Assets

➢ Bidding documents with the necessary adjustments, acceptable to the Bank, will be used to clearly
establish that the object of the acquisition will be made by leasing an asset with option to
purchase.
➢ It is suggested to clearly describe the need to satisfy, expected performance and the required
good, the time of use and related services such as operation, maintenance, training, supply of
consumables and other aspects, as appropriate.
➢ To determine the most advantageous offer, it is recommended to include minimum conditions
based on industry standards to evaluate and compare bids.

Useful for computer equipment, office equipment, medical equipment, storage spaces, transportation,
among others.

Recommendations for the procurement of Second-Hand Goods

Procurement of ➢ Determine the updated and reasonable market value without exceeding the cost of new goods,
through market research, accounting valuations, or expertise.

Leased Assets ➢

➢
Materials recovered, recycled, consumables, packaging, among others should not be considered
second-hand goods.
Second-hand goods may be reviewed and subject to certifications or independent tests stipulated

and Second-Hand in the bidding documents, to verify that they meet the required characteristics, that they are in
good functional and operational condition, and which can operate under the conditions envisaged
for the expected period.

Goods ➢ Require warranty of use/operation, maintenance, as well as rules on return for defects and hidden
defects, among others.
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The evaluation and comparison of bids, as appropriate, is carried out through the application of
bid/proposal evaluation criteria.

General considerations for the evaluation criteria

➢ Bidding documents should include all the criteria to be applied and how to verify its compliance.
➢ They must be appropriate to the nature, risks, value, complexity, value of the acquisition and
objective of the procurement process, as well as to market conditions.
➢ They shall be objectively comparable between the different offers and, as far as possible,
quantifiable (e.g. convertible in monetary terms).
➢ Clear and precise. It should be avoided to include criteria whose verification is disproportionately
costly or complex or may be considered discretionary.
➢ Criteria that is not expressly indicated in the relevant bidding document will not be accepted.
➢ If changes are made to the criteria, they should be reflected in the bidding document and
communicated to all bidders who obtained it, by issuing an amendment, with enough time for the
review and consideration of the bidders to prepare and submit new bids as the case may be.

Evaluation and In order to design processes according to the basic principles of procurement, the criteria may consider
the following factors:

Comparison of Price

➢ Price offered

Bids ➢ Adjusted bid price as indicated in the bidding documents, plus lifecycle costs1 based on net
present value.

1 From the buyer's perspective this includes the total cost of ownership and the value of disposal or final disposal of the acquired good. Total cost of ownership is a calculation method that determines direct and indirect costs, as well as
Links and benefits, related to a product or system, so it reflects not only the cost of the purchase, but also the costs associated with its use and maintenance.
References
 Home

Evaluation Methods
Evaluation and A. Cost evaluation

Comparison of Bids Costs will be assessed taking into account:

➢ Price offered, adjusted. Adjustments to the bid/proposal price include
arithmetic corrections, discounts and any other adjustments specified in the
Other Dimensions bidding document for evaluation purposes.
➢ Lifecycle costs. They should be used where feasible, particularly where the
➢ Quality: Criteria that serves to determine the degree of compliance with the costs of operations or maintenance during the specific life cycle of goods or
requirements and technical specifications. works are deemed to be considerable compared to the initial cost and may
➢ Sustainability: Criteria for considering economic, social and/or vary from one offer/proposal to another. They are evaluated based on net
environmental impact and benefits throughout the life cycle. present value (NPV).
➢ Innovation: Criteria for evaluating innovation in the design or acquisition of
goods, works, non-consulting services or consulting services, which allow B. Score and price evaluation (combination)
bidders to include in their bids diverse solutions to maximize the VFM, as
long as they do not compromise the minimums required and the quality of The scored assessment allows you to evaluate non-price characteristics, based
what is requested on the number of points earned on merit. It is used when the benefits are not
quantifiable (or the evaluation criteria cannot be expressed in monetary terms)
Evaluation Criteria and its Classifications and the benefits associated with these scored criteria are expected to vary from
one offer/proposal to another.
The evaluation criteria is classified in two groups:

➢ Monetary measures: Can be expressed in terms of money.

➢ Non-monetary: They do not have a monetary representation.
➢ Qualification criteria - Minimum requirements that are indicated in
the spread and evaluated on the basis of whether or not it passes.
➢ Criteria by score - They are those that are evaluated by assigning
points based on merit.

1 From the buyer's perspective this includes the total cost of ownership and the value of disposal or final disposal of the acquired good. Total cost of ownership is a calculation method that determines direct and indirect costs, as well as
Links and benefits, related to a product or system, so it reflects not only the cost of the purchase, but the costs associated with its use and maintenance.
References
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Evaluation and C. Cost-benefit

It is a financial assessment tool that allows to measure the relationship between
the costs and benefits of a proposal in order to evaluate its profitability. For this
Comparison of Bids technique, the costs and benefits are expressed in monetary terms and the net
present value of the money flow over a period of time must be estimated.

D. Cost effectiveness
The scored evaluation and sub criteria, as appropriate, are prioritized, receive It is an economic analysis tool that allows you to compare the relative costs with
points on merit, and are weighted from their relative importance to achieve the the results of two or more proposals. It is frequently used in the field of health
expected results. As few sub criteria as possible should be maintained. services where it can be complex to monetize the health effects. It is expressed
in terms of a reason where the denominator is a gain in health (i.e. years of life)
The evaluation criteria may include, inter alia, the following characteristics: and the numerator is the cost associated with increased health.

➢ Performance, capacity and functionality

➢ Innovation
➢ Sustainable procurement

The score assigned to the evaluation criteria, as well as the weighting of each of
the dimensions considered (price and quality/sustainability/innovation) should
be clearly indicated in the documents. It is recommended that the weight given
to the scored evaluation criteria does not exceeds thirty percent (30%).

However, it can go up to fifty per cent (50%) if it is justified in order to achieve

the best VFM and, consequently, the most advantageous offer.

Links and
References
 Links and References

➢ Bergman, Mats A., and Lundberg, Sofia (2011). Tender Evaluation and Award Methodologies in
Public Procurement. Working Paper. Södertörn University of South Stockholm, Sweden.

➢ Casartelli, Giovanni (2007). Selection and Employment of Consultants: The Effectiveness of The
World Bank’s Policy. Working Paper. Elmar Wolfstetter Humboldt University, Berlin.

➢ Dimitri, N., Piga, G., and Spagnolo, G. (2006). “Scoring Rules” in Handbook of Procurement.
Cambridge University Press, New York. Pp. 293-321.

➢ Dimitri, Nicola (2012). Best Value for Money in Procurement. Working Paper No. 2012/02.
Maastricht School of Management. The Netherlands

➢ UNICTRAL (2014). Model Law on Public Procurement UNICTRAL. United Nations, New York

➢ Directive 2014/24/EU of the European Parliament and of the Council of 26 February 2014 on
Public Procurement

➢ World Bank (2016). Procurement Regulations for Borrowers. The World Bank IBRD-IDA

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An Abnormally Low Bid (ALB) is the one whose price, in combination with other elements of the offer, is
so low that it raises serious doubts in the borrower about the bidder's ability to execute the contract at
the quoted price.

Relevant considerations

Multilateral Development Banks (MDBs) jointly developed a methodology for the identification and
treatment of ALBs. The methodology proposes an arithmetic formula for identifying offers in a risk
zone of ALBs:

Where:

Abnormally Low
= Minimum acceptable offer.
= Average of offers.
= Standard Deviation

Bids ➢ The formula assumes a normal price distribution and requires at least five offers. It uses a relative
approach, as it compares with the prices presented by the other bidders.
➢ In case of four or fewer offers, it is recommended to use an absolute approach. That is, based on
the comparison of the prices of the offer(s) with the budget of the cost of the acquisition drawn up
by the borrower.

Links and
References
 Home

¿How to prevent ALBs?

Abnormally Low Bids

➢ Perform proper project preparation/design.
➢ Perform an adequate budgeting of the project based on market analysis.
➢ Respond satisfactorily to requests for clarification from bidders.
➢ Include the clause and treatment of ALBs in the bidding documents.
➢ Evaluate the appropriateness of a prequalification phase.
¿What to do if you identify ALBs? ➢ Establish the proper evaluation criteria.
➢ Ask the bidder for written clarifications, including detailed analysis of their ➢ Establish adequate guarantees and bidding times.
offer in relation to the subject matter of the contract, scope, proposed ➢ Carry out the bidding process in multiple stages, especially for complex
methodology, schedule, risk and liability allocation, price details and any construction projects.
➢ Designate an expert works supervisor and establish an appropriate budget
other requirement of tender documents. The guidelines set out in section 4
for this.
of the final report of the MDB Working Group can be used as a reference.
➢ If the clarifications do not provide sufficient basis to support the offer, it ¿In which cases can you have ALBs?
must be rejected.
➢ If the clarification is satisfactory the offer is accepted, but if risks persist, an When the bidder, for example:
increase in the guarantee of faithful compliance with the contract, up to ➢ Can implement economies of scale.
20% of the price of the contract, can be requested. ➢ He is interested in entering a new market and takes the strategic and
conscious position of bidding low.
➢ It proposes a more efficient and innovative working method.
Risk of accepting ALBs
➢ Intends to enter a market where there are limitations to competition.
➢ Suboptimal contractual performance.
➢ Scope changes in terms of cost and time during contract execution.
➢ Early termination of contracts that may result in lengthy and costly lawsuits
or arbitration.
➢ Contractor's bankruptcy or insolvency.

Links and
References
 Links and References

➢ Final Report. MDBs Abnormally Low Tenders Working Group

➢ World Bank. Guide to the identification and treatment of Abnormally Bids and Proposals

➢ Asian Development Bank. Abnormally Low Bids

➢ Abnormally Low Tenders Prices Under Works Contracts. EBRD Perspective and Cases

➢ Abnormally Low Tenders. Sigma Initiative OECD

➢ Checklist for protecting competition when managing the risks of very low tenders

➢ Dimitri, N., Piga, G., and Spagnolo, G. (2006). “Abnormally Low Tenders” in Handbook of
Procurement. Cambridge University Press, New York. Pp. 34-36.

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Procurement

Direct Competitive

National International

Country
NCB Limited Open
Systems

Decision Tree Shopping RFB RFP

Selection methods and Prequalification

No Prequalification
No

market approaches Prequalification Prequalification

Competitive Innovation
One Stage Multistage
Dialogue Partnership

1 Envelope 2 Envelopes
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Specifications

Detailed Technical Specifications

Detailed technical specifications define the mandatory requirements of the good, work or services
subject to the procurement process by clearly and accurately describing the essential technical
characteristics and requirements.

Functional/Performance Technical Specifications

Technical specifications formulated in terms of performance or functional requirements are defined as

those describing the function, objective or performance to be achieved, rather than specifying the
product or service that is the subject of the contract. In other words, the functional specifications focus
on the real needs that the contract seeks to meet and let the market suggest the best path to its
achievement, without establishing mandatory technical elements.
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Type:
Rating
Selection Criteria*
➢ Minimum requirements set out in the
* They refer to the qualities or specification; are usually evaluated
characteristics of the bidder based on go or no-go.

Type:
Monetary
➢ Price adjustment
➢ Price adjustment + Life Cycle Cost
(NPV)
Evaluation Criteria* Type:

Decision Tree
Tipo:
Rating Type:
* They refer to the characteristics Non-Monetary
of the offer or proposal
Comparable
➢ Quality
Type:
Evaluation methods and ➢ Sustainability (Environmental,
Economical, and Social)
➢ Innovation
Rating Type:
Not
criteria ➢ Other ➢ Points are assigned based on
merit Comparables

➢ Lowest bid
➢ Lowest assessed bid
Award Criteria* ➢ Best rated offer/proposal (price-quality)
➢ Better cost-benefit ratio
* It is the rule to award the most
advantageous bid ➢ Better cost-effectiveness
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Example

Net Present Value Calculate your NPV, given the indicated investment data and cash flows, and
considering an annual discount rate of 10%.

Example Available in Ecxel with the formula = NPV( )

Definition Initial $42,000
Investment
Net Present Value (NPV) is the current value of a series of cash flows that take
place at different times in the future. The NPV represents the value of the Year 1 $14,000
money over time and depends on the time interval between today and the Year 2 $14,000
periods in which cash flows occur, as well as the discounted rate.
Year 3 $14,000
Year 4 $14,000

What is the value of utilizing NPV? Year 5 $14,000

Net Present Value provides a method for evaluating and comparing capital
projects, financial products with cash flows over time, contracts, bid lifecycle 14,000 14,000 14,000 14,000 14,000
𝑵𝑷𝑽 = −42,000 + + + + +
costs, etc. 1 + 0.1 1 1 + 0.1 2 1 + 0.1 3 1 + 0.1 4 1 + 0.1 5

𝑵𝑷𝑽 = 11,071.01
Formula Decision Criteria

𝑁 1. Selection of projects or investments with NPV > 0

𝐶𝑡 C0 Initial investment 2. When comparing between multiple projects or offers, select the project with
𝑉𝑃𝑁 𝑟, 𝑁 = 𝐶0 + ෍ Ct Cash Flows
the highest VPN
(1 + 𝑟)𝑡 N Number of Periods

𝑡=0
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Sustainable Procurement allows organizations to meet the needs of goods, services or works by
applying the VFM principle based on a life cycle analysis, with benefits to the entity, society and the
economy, as well as a reduction in negative impacts on the environment. Sustainable procurement
encompasses the economic, environmental and social dimensions in a context of good governance to
ensure institutional sustainability.

Economic Environmental Social

➢ Value for Money ➢ Emission Reduction ➢ Vulnerable groups,
➢ Life Cycle Costs ➢ Waste Management minorities and gender
➢ Economic Development ➢ Ecosystem Protection inclusion
➢ SMEs Development ➢ Use of Renewable Energy ➢ Human and labor rights
➢ Innovation protection
➢ Poverty Reduction ➢ Human Development

Sustainable Benefits for the Countries

Procurement ➢
➢
Economic savings and smart investments
Reputation
➢ Compliance with domestic policies and international best practices
➢ Incentive for innovation in the domestic industries

IDB Objectives
➢ Supporting LAC countries to meet the Sustainable Development Goals (SDGs)1
➢ For countries to adopt climate change and environmental sustainability as a mainstream practice
➢ The goal of increasing funding for climate change-related projects

1 The United Nations approved the 2030 Agenda on Sustainable Development in 2015, which defined 17 Sustainable Development Goals. In this context, each of the 193 signatory countries is committed to achieving certain targets.
Links and
References
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¿What is green procurement ?

Green procurement refers to the environmental dimension of sustainable procurement. They are
understood as acquisitions of goods, works, services or consultancies with more harmless results for the
environment and human health and safety compared to others with which they compete and that fulfill the
same function, or that can even generate positive impacts on the environment.

Goods • Buying furniture made from recycled materials or for which non-polluting materials are
used during its manufacturing process.
• Buying appliances, sanitary hot water equipment, lighting lamps or air conditioning
equipment with eco-labels that guarantee its high energy efficiency.

Works

Sustainable
• In building projects, incorporating energy and renewable efficiency measures, responsible
consumption and conservation of water, passive construction (building orientation, natural
ventilation) and resilience to climate change (deep foundations , hurricane-resistant roofs,

Procurement
planting trees for shade).
Consulting
Services • Hiring design consultancies that include certain environmentally friendly technical
solutions, such as bioclimatic architecture, use of local materials, the incorporation of
renewable energies or the implementation of measures energy savings in their projects.

Services • Hiring services instead of purchasing some goods, especially when they have a very short
shelf life, to ensure that the supplier will take care of the removal of disused goods.

Links and More examples #1 #2

References
 Links and References

➢ Sustainable Development Agenda

➢ Green Procurement: How to Encourage Green Procurement Practices in IDB Funded Projects?

➢ ¿Qué es la infraestructura sostenible? Un marco para orientar la sostenibilidad a lo largo del ciclo
de vida del proyecto

➢ Gender in Infrastructure

➢ A Handbook on green public Procurement European Commission

➢ Handbook for the Inter-American Network on Government Procurement (INGP) Implementing

Sustainable Public Procurement In Latin America and the Caribbean

➢ Guidance on Sustainable Procurement. World Bank.

➢ Consideraciones Ambientales en las Adquisiciones del PNUD

➢ SMART SPP Innovation through Sustainable Procurement

➢ European Sustainable Procurement Network Procura+

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Project Team Leader (TL)

Sustainable
The TL, being responsible for leading the project and for the non-
objection to the documents and procurement processes carried
out by the EA, is the main spokesperson and driver from the Bank
Procurement that can ensure the implementation of a sustainable procurement
approach.

¿Who can help drive sustainable procurement?

Climate Change Specialist (CCS)
Executing Agency The CCS provides specialized inputs to the partners with the
borrowing country in incorporating environmental considerations
and can promote actions that result in a necessity to contract
The role of the EA is critical to driving and implementing sustainable goods, works, services and consultancies.
sustainable procurement. As responsible for the execution of
the project, it defines the characteristics of the goods, works,
services and consultancies that they want to acquire where it
Suppliers, Consultants and Contractors
is possible to include green specifications. They play an important role in offering innovative and good
quality and environmentally responsible products. The ability of
these actors to deliver environmentally responsible goods, works,
IDB Representative in the country services and consultancies is one of the main success factors for
effective implementation.
Within the Bank’s Country Strategy, it is possible to include
the first references to the incorporation of goods, works,
services and consultancies with a sustainable approach in the
Chief of Operations
case of resource-based procurement for Bank-financed
The COO, in its role in supporting the formulation and monitoring
operations.
of the Bank’s Country Strategy, must verify that operations
respond to key regional and corporate strategy issues. If the
Country Strategy includes the reference to sustainable
procurement, it may suggest the inclusion, in the programs, of
Sustainable Procurement goods, works, services and consultancies.
Life Cycle
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Procurement Plan

Relevant concepts for the planification for sustainable procurement: Identification of Needs
Before incorporating a process into the Procurement Plan, it is important to
Life Cycle Costs (LCC)
conduct a needs assessment considering the environmental, social and
From the point of view of the entity who executes the project (the EA), the total economic impacts it might have. At this stage it is important to consider
cost of a good, service or work is not only determined by the price, but is whether the good, service, work or consultancy to be hired represents the best
composed of the costs associated with delivery, installation, operation way to meet the defined need, whether recycled or remanufactured products
(including energy expenditures, fuel, water, etc.), maintenance and waste, as well can be purchased, or even the purchase of products can be rethought by hiring
as the cost of externalities. comprehensive services or solutions that may have less impact.

Market Research
Having a good knowledge of the market is essential to decide the best way to
Tools for calculating LCCs implement sustainable procurement, know the existence of environmentally
➢ Tool to estimate LCCs and CO2 emissions in acquisitions friendly alternatives, the ability of the market to respond to environmental
under the SMART-SPP project requirements and even identify innovative solutions

➢ European Union standard method for estimating LLC in In addition, market research may detail the technical standards adopted in the
construction projects country on the goods, services or consultancies they intend to contract. Market
analysis should be objective and queries to suppliers or contractors, where
➢ Tool developed by Sweden appropriate, should be transparent and non-discriminatory.
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Procurement Plan
2
Public Procurement of Innovation Definition of the Object of the Contract
The concepts of environmental sustainability and innovation are closely related The definition of the object and name of a "sustainable" contract provides an
as, for example, a new technology can extend the lifespan of a good or reduce opportunity to send a signal to the market, the community and the rest of the
the amount of components or pollutants. authorities about the intention to implement sustainable purchases.

In order to identify more sustainable solutions, innovation in the market needs Below are some examples of titles that signal to the market about the intention
to be fostered. There are several instruments that facilitate innovation such as to implement sustainable procurement.
Pre-Commercial Public Procurement and Competitive Dialogue.

➢ Consulting for the certification of a sustainable building

➢ Provision of recycled and eco-friendly paper for photocopiers and printers
for general use of the municipality
Pre-Commercial Public Competitive Dialogue ➢ Energy-efficient street lighting grid construction
Procurement ➢ Building remodeling with environmentally friendly materials and products
Method commonly used for large and ➢ Supply and installation of photovoltaic generators
Recruitment of research and complex projects where technical ➢ Construction of permeable pavements
development (R&D) services in order specifications cannot be defined in ➢ Cleaning services with organic products
to find solutions to future public advance and where various phases of
demands. In this type of hiring the dialogue are held with suppliers prior
government and suppliers share the to the award of the contract.
risks and benefits with the aim of
developing innovative solutions.

2 In 2016, the IDB conducted a study on Innovative Public Procurement (CPI) with the aim of advancing knowledge of the role of public procurement as a demand-side policy tool to stimulate innovation in Latin America and Car (LAC). The
Links and report reviewed evidence on the implementation and impact of the instruments and structures for ICC support used by a sample of developed countries, identifying useful policy lessons for LAC countries.
References
 Links and References

➢ Spurring Innovation-led Growth in Latin America and the Caribbean through Public
Procurement

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Contracting Requirements, Technical Specifications and Terms of Reference

Technical specifications are the channel through which the buyer describes to
the market the characteristics of the good, service or work that it intends to hire
by providing information on the requirements on which it will base the
The procurement stage offers multiple opportunities for sustainable evaluation of the offers and is considered the most common means of including
procurement as it ranges from the definition of technical specifications, the sustainable criteria.
evaluation and selection of suppliers and the evaluation of bids, to the award of
the Contract.

This phase is where criteria is established and the possibility of awarding a Environmental Technical Standards → There are various national
sustainable contract materializes. and international standards that establish product and works
guidelines with sustainable criteria that can be used as a reference
Preparation of Bidding Documents and Proposal Requests for formulating specifications.

Bidding documents, in the case of acquisitions of goods, works and services In some specific cases, national legislation establishes mandatory
other than consultancy, and the request for proposals documents for compliance standards, or special certifications that must be
consultancy services, constitute the set of documents prepared by the Borrower considered. In other cases, it is not a legal requirement, but it is a
for each acquisitions that they make and that are made available to those common practice in the country or is technically recognized by
interested in participating in the process. professional associations.

Whenever reference is made to a standard in a tender document or

request for proposal, reference should be made to the word
"equivalent" in order not to limit competition.
Click on the image to see the
“International Standards”

Links and
References
 Links and References

➢ ISO 14000. Environmental Management

➢ European Commission Green Public Procurement

➢ European Committee for Standarization Technical Standards

➢ Colombia National Standards

➢ Uruguay National Standards

➢ Mexico National Standards

➢ Brazil National Standards

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Materials and Selection Methods

Contracting The environmental impact of a good or services is largely
determined by what and how it is produced. In the technical
specifications it is possible to establish conditions on the use of
recycled and reused material, restrictions on the use of hazardous
substances in products, and conditions on the forms of extraction
National and Sectorial Policies of raw materials, manufactures waste of the good.
Several countries have national sustainable procurement policies
and policies to promote and/or promote the use of sustainable
technologies in goods, works and services. These measures
provide benefits and rewards to institutions that adopt
sustainable criteria in their acquisitions.
Eco-Labelling
Another tool that can be useful for managing sustainable
purchases and defining specifications. Eco-Labels identify
sustainable or socially impactable environmental products or
services, are based on the definition of objective and transparent
criteria and are granted by an independent third party.

Certifications
There are different types of certifications, which are granted by
an independent third party, when the products or works meet
certain standards. The technical specifications defined for
certifications can also be used as inputs to define characteristics
of the associated works and consulting services.

Links and
References
 Links and References

Forest Stewardship Council Fairtrade

Program for Endorsement Forest Certification LEED

Rainforest Alliance EDGE

Electronic Product Environmental Assessment Tool WELL

TCO Certified Sistema B

EU Ecolable

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Contracting

Bid Evaluation and Contract Award

Under the procurement policy it is possible to consider factors other than price
to determine the lowest bid, including environmental benefits. Bidding
documents should specify the relevant factors, in addition to the price, to be
considered in the evaluation of bids and how they should be applied in order to Examples
determine the best bid.
#1
It is of great importance that the criteria taken into consideration for the
evaluation of bids have been published and mentioned explicitly in the bidding
documents including how they will be evaluated and rated, and that they are #2
specific, objectively distinguishable between different proposals and do not
limit competition. #3
These must be expressed, to the extent possible, in monetary terms, or given a
relative weighting in order to determine the "most advantageous offer" to
which the Contract will be awarded.

Links and
References
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Compliance Monitoring

Contract There are various ways to carry out this monitoring, such as
directly requesting evidence of compliance from the contractor,

Management conducting review/supervision visits, or hiring a third party to

perform the monitoring (in the case of works, the
supervising/fiscal entity is responsible). Contracts may include
The contracts resulting from the procurement processes clearly establish the penalties for non-compliance or bonuses for good performance.
rights and obligations of the Hiring Entity and the Contractor, as well as the A good common way to measure performance is through key
form, conditions and deadlines in which the products subject to the contract performance indicators (KPIs) which may be associated with the
must be delivered and the corresponding payments. contractor's right to claim payments if performance had been
higher than agreed in the contract.
To ensure that all aspects and conditions of the Contract are respected, EAs
must also have reliable and efficient management mechanisms to continuously
and timely monitor the performance of contracted entities or individuals and
the execution of contracts, and have agile management systems that allow Examples of requirements that can be incorporated into environmental clauses:
them, in turn, to fulfil their respective obligations, such as the timely delivery of
payments, the processing of any modifications to the designs, or attention to
protests. ➢ One-time bulk deliveries and not per unit on multiple occasions reduces
the transportation required. You can specify the maximum number of
deliveries per month or week.
Environmental Clauses ➢ Goods may be required to be delivered out of traffic hours, to avoid
worsening congestion.
Environmental considerations could be incorporated into the ➢ Require the supplier to remove (and recycle or reuse) the product
contract clauses if they have been included in the bidding packaging which contributes to the removal of unnecessary packaging.
document. For example, require the supplier to properly remove ➢ Certain characteristics may be required for vehicles in which transfers are
and dispose of equipment at the end of their service life, carried out.
particularly when it comes to potentially polluting supplies such ➢ In works and services, the transport of products and tools to the site must
as batteries, printer cartridges, etc. Once they are incorporated be solely and not separately, to use as little transport as possible.
into the contract it is mandatory. ➢ The transport of items must be done in reusable containers.

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Examples of requirements that can be incorporated into environmental clauses:

Evaluation of the ➢ One-time bulk deliveries and not per unit on multiple occasions reduces
the transportation required. You can specify the maximum number of
Quality of Works, ➢
deliveries per month or week.
Goods may be required to be delivered out of traffic hours, to avoid

Goods and Services ➢

worsening congestion.
Require the supplier to remove (and recycle or reuse) the product
packaging which contributes to the removal of unnecessary packaging.
Regarding quality controls, receipt and final acceptance of products, the EA is ➢ Certain characteristics may be required for vehicles in which transfers are
responsible for the technical-administrative supervision of contracts, so it must carried out.
verify that the designs, technical specifications, terms and conditions of those ➢ In works and services, the transport of products and tools to the site must
contracts are fully complied with, in all their formal, technical and legal aspects. be solely and not separately, to use as little transport as possible.
➢ The transport of items must be done in reusable containers.
Regarding the performance assessment of the contractor or supplier, at the end
of the works or services, it is advisable in accordance with the best practices
that the EA makes an assessment of the performance of the Contracted Party
according to previously established parameters, taking into account; the quality
of the products delivered; efficiency and suitability of staff and equipment
employed; meeting of deadlines; good readiness to negotiate and make the
necessary adjustments or additions to improve the project proposed by the EA
and to heed the comments of the EA or its representative.

This assessment also provides an opportunity to review whether sustainability

goals were achieved, to measure sum impact and to incorporate lessons learned
to improve future sustainable procurement processes.